Confused About PF Calculation: Should It Be on Gross or Basic Salary Now?

Hello! Can anyone tell me whether PF has to be calculated on gross or basic now? Earlier, it was calculated on basic, and later, it was changed to gross. But will they spare us if we don't calculate on gross but on basic? I have recently joined an organization. Can you please guide me? This is urgent! I heard that some were paying on basic only even now without any problem. Is it true?

PF needs to be paid only on basic + DA. No other components will be added for the contributions to EPF unless the employee requests it. So, a total amount of 12% from the basic pay of the employee's side and 13.65% (12% + EDLI and other admin charges) from the company's side will go towards EPF contributions for every employee.

If an employee's basic salary is less than 15k, it is compulsory to deduct the EPF. ESIC will be deducted from the gross wages.

Hello! Thank you for the response. There is a rule that PF has to be paid on the gross, but some of them are not paying it correctly. They are paying it on basic, which is a violation of the rule. I also heard that those who are paying on basic, even after the rule to pay on the gross has been passed, will have to pay a penalty for the period they have been paying on basic in the future.

Provident Fund Calculation

PF will be calculated on Basic + DA, not on Gross till date.

A/C 1 (Provident Fund Employee's Contribution @ 12%)
A/C 1 (Provident Fund Employer's Contribution @ 3.67%)
A/C 2 (Administration Charges @ 0.85% or (minimum) Rs. 500/-, whichever is more)
A/C 10 (Pension Fund Employer's Contribution @ 8.33%)
A/C 21 (Employee's Deposit Linked Insurance Employer's Contribution @ 0.50%)
A/C 22 (Administration Charges @ 0.01% or (minimum) Rs. 200/-, whichever is more)

Employer, please check the A/C 2 and 22 for the minimum limit.

Dear Naina,

Kindly find attached the circular from the PF department, where it is clear that the PF is based on Basic + DA and nothing else.

Regards,
Ashutosh Thakre

Provident Fund Calculation

PF will be calculated on Basic + DA, not on Gross till date.

A/C 1 (Provident Fund Employee's Contribution @ 12%)
A/C 1 (Provident Fund Employer's Contribution @ 3.36%)
A/C 2 (Administration Charges @ 0.85% or (minimum) Rs. 500/- whichever is more)
A/C 10 (Pension Fund Employer's Contribution @ 8.33%)
A/C 21 (Employee's Deposit Linked Insurance Employer's Contribution @ 0.50%)
A/C 22 (Administration Charges @ 0.01% or (minimum) Rs. 200/- whichever is more)

Employer, please check the A/C 2 and 22 for the minimum limit.

Regards,
Govind
[Phone Number Removed For Privacy Reasons]

PF Contribution Guidelines

PF Contribution is 12% of Basic + DA for all cases. There is a circular from the PF Department stating that if the Basic + DA is below the Minimum Wages for that state, then PF should be 12% on the Minimum Wages for that state. This circular has been challenged, and cases are pending in some courts. The IT Department itself is not pursuing the implementation of this circular, except for reminding everyone that this will be implemented with immediate effect.

If the Basic + DA exceeds Rs. 15,000 per month at the time of starting employment in a covered establishment by an employee who does not have an active PF number, then the employee may be enrolled if he/she so requests in writing, in which case the PF calculation can be on Rs. 15,000 or the actual Basic + DA as mutually agreed by the employee and employer.

Thank you all. Our establishment received mails from the PF office stating that the payment should be on the gross hereafter. Consequently, they started paying on the gross, and now we have no other option but to continue. When we approached the PF office, they informed us that it is a rule to pay on the gross, so there is no need to worry. Which is correct then? Please clarify.

The emails from the PF Office cannot state that PF has to be paid on the gross, except in the conditions mentioned above. The contents of the emails need to be studied more carefully.